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CIRCULAR No

CIRCULAR No. 90/2002/TT-BTC OF OCTOBER 10, 2002 GUIDING EXPORT TAX, IMPORT TAX AND VALUE ADDED TAX ON GOODS SOLD TO FOREIGN TRADERS BUT DELIVERED TO OTHER ENTERPRISES BASED IN VIETNAM AND DESIGNATED BY FOREIGN TRADERS FOR USE AS RAW MATERIALS FOR EXPORT GOODS PRODUCTION AND/OR PROCESSING

Pursuant to the December 26, 1991 Import and Export Tax Law, the July 5, 1993 Law and May 20, 1998 Law No. 04/1998/QH10 amending and supplementing a number of articles of the Import and Export Tax Law; the Government�s Decree No. 54/CP of August 28, 1993 and Decree No. 94/1998/ND-CP of November 17, 1998 detailing the implementation of the December 26, 1991 Import and Export Tax Law and the Laws amending and supplementing a number of articles thereof;

Pursuant to the Value Added Tax (VAT) Law; the Government�s Decree No.79/2000/ND-CP of December 29, 2000 detailing the implementation of the VAT Law and Decree No.76/2002/ND-CP of September 13, 2002 amending and supplementing a number of articles of the Government�s Decree No.79/2000/ND-CP;

Following the Prime Minister�s directions in Document No.660/CP-KTTH of June 14, 2002 on taxes on on-spot export and import goods;

The Finance Ministry hereby guides the export tax, import tax and VAT on goods sold to foreign traders but delivered to other enterprises based in Vietnam and designated by foreign traders for use as raw materials for export goods production and/or processing as follows:

I. OBJECTS OF APPLICATION

Goods produced and sold by Vietnam-based enterprises (including Vietnamese enterprises and foreign-invested enterprises) to foreign traders under foreign trade contracts, which are paid for by foreign traders in foreign currencies but delivered to other Vietnam-based enterprises designated by such foreign traders for further production and/or processing of export goods.

II. A NUMBER OF WORDS AND PHRASES REFERRED TO IN THIS CIRCULAR SHALL BE CONSTRUED AS FOLLOWS

- On-spot export means that goods produced in Vietnam for sale to foreign traders but delivered to other enterprises based in Vietnam and designated by foreign traders.

- On-spot exporting enterprises mean enterprises engaged in on-spot export activities.

- On-spot importing enterprises mean enterprises that receive goods from on-spot exporting enterprises as designated by foreign traders.

III. CONDITIONS FOR ENTITLEMENT TO THE TAX POLICY GUIDED IN THIS CIRCULAR

- On-spot goods export and import shall be effected under foreign trade contracts signed with foreign traders, which clearly state goods categories and quantities, names and addresses of goods-receiving enterprises in Vietnam.

- Foreign traders must pay for on-spot exports in freely- convertible foreign currencies via banks.

- Enterprises must open customs declarations for on-spot export-import goods.

- Goods produced by on-spot exporting enterprises (which are foreign-invested ones) must be those specified in their investment licenses.

IV. APPLICABLE TAXES

1. VAT: On-spot export goods shall enjoy the VAT rate of 0%.

1.1. On-spot exporting enterprises must produce to local tax offices all the following dossiers:

- The added value invoices already handed to the on-spot importing enterprises upon goods delivery, which must be inscribed clearly with the names of the foreign traders and on-spot importing enterprises receiving goods (importing establishments) as well as the goods-delivery places in Vietnam.

- The trading contracts signed between on-spot exporting enterprises and foreign traders.

- The vouchers of payment for on-spot exports by foreign traders via banks and in freely- convertible foreign currencies.

- On-spot export-import goods declarations.

In cases where on- spot export establishments fail to fully submit the above-mentioned procedural dossiers, they shall not be eligible for the application of the nought-percent VAT rate and must pay VAT under the provisions of the VAT Law as for the domestically-sold goods.

1.2. On-spot importing enterprises shall pay VAT under the guidance in the Finance Ministry�s Circular No.122/2000/TT-BTC of December 29, 2000 and Circular No.82/2002/TT-BTC of September 18, 2001, which guide the implementation of the Government�s Decree No.79/2000/ND-CP of December 29, 2000 and Decree No.76/2002/ND-CP of September 13, 2002. Particularly for goods imported on the spot for use as raw materials for export goods production and/or processing, they shall not be liable to VAT under the guidance at Point 21, Section II, Part A of the above-mentioned Circular No.122/2000/TT-BTC of December 29, 2000. On-spot importing enterprises must produce to the customs offices where they carry out on-spot import procedures the following dossiers:

- Import contracts made according to the provisions of the Commercial Law and signed with foreign traders. The contracts must clearly state the goods names and categories consistent to the goods of on-spot exporting enterprises.

- On-spot export-import goods declarations.

- Contracts on goods export to, or goods processing for, foreign traders.

- Commercial invoices.

- Written registrations of the import of supplies and/or raw materials for export goods production and/or processing for foreign countries, including supplies and/or raw materials imported on the spot.

2. Export tax: Export goods are subject to export tax payment according to the provisions of the Export and Import Tax Law and the current export tariff.

3. Import tax:

3.1. Enterprises importing supplies and/or raw materials for on-spot export goods production shall, after completing the on-spot export procedures, be considered for import tax reimbursement for the supplies and/or raw materials volumes corresponding to on-spot export products.

Procedural dossiers for consideration of import tax reimbursement: Apart from the procedural dossiers stipulated at Point 1.1 above, enterprises must submit the following:

- Official dispatches requesting import tax reimbursement for supplies and/or raw materials already imported for on-spot exports production, concretely explaining the volumes and value of imported raw materials and/or supplies used for the production of goods sold to foreign customers, which must be consistent to the export goods categories and volumes in the on-spot export goods declarations, covering the following contents: the serial numbers of the import goods declarations; the goods categories and volumes, the value of imported raw materials and/or supplies; the volumes of already exported products; the already paid import tax amounts and the import tax amounts requested for reimbursement;

- Written explanations on the actual consumption norms of the imported raw materials and/or supplies for the production of a unit product for on -sport export by enterprises and the enterprise directors shall be accountable for the legality, accuracy and truthfulness of those reports;

- Customs declarations on import goods for raw materials and/or supplies; import goods trading contracts;

- Tax notices and import tax-payment receipts;

- Foreign trade contracts signed with foreign traders in strict compliance with the provisions of the Commercial Law, which clearly state the goods categories and volumes as well as the names and addresses of goods-receiving enterprises in Vietnam;

- Import contracts signed between foreign traders and on-spot importing enterprises; on-spot export and import goods declarations (stamped and certified as true copies by the directors of the on-spot importing enterprises).

The enterprise directors (or chairmen of enterprise managing boards) must assure the truthfulness, legality and validity of vouchers and papers in the tax-reimbursement dossiers and be accountable to law bodies for the figures and documents they supply.

As soon as their products have been exported on the spot, enterprises eligible for import tax reimbursement may send import tax-reimbursement dossiers to the customs offices (where they have filled in the procedures for import of raw materials and/or supplies) so as to be considered for import tax reimbursement.

Basing themselves on the above-prescribed dossiers, the provincial/municipal Customs Departments shall consider and issue decisions on import tax reimbursement.

For raw materials and/or supplies imported for export goods production, if products are actually exported within the prescribed tax payment time limit, the import tax shall not be paid for the volume of raw materials and/or supplies corresponding to the goods volume actually exported. The dossiers for consideration of non-collection of tax shall comply with the provisions on tax reimbursement dossiers; particularly, the tax-payment receipts, shall be replaced with official tax notices of customs offices.

3.2. The on-spot importing enterprises must carry out the procedures for registration of the on-spot import goods declaration, tax calculation and payment, strictly according to the provisions of the Export and Import Tax Law and the current guiding documents.

V. HANDLING OF VIOLATIONS

In cases where on-spot importing enterprises do not use on-spot import goods as raw materials for export goods production but sell them or use them for other purposes:

- Regarding VAT: They must declare and pay VAT to the tax offices directly managing them. The time limit for VAT declaration and calculation shall be counted from the month the goods sold or used for other purposes. The VAT calculation prices shall be the sale prices without VAT. If the goods are not sold but used for other purposes, the VAT calculation prices shall be the sans-VAT sale prices of goods of the same kind on the market.

- Regarding import tax: They must declare and pay the import tax to the customs offices (where they have filled in the import procedures for the goods lots). The time limit for retrospective tax payment declaration shall be 2 (two) days from the date of changing the goods use purposes as inscribed in the related documents, vouchers and invoices. In case of unavailability of vouchers to determine the date of changing the goods use purposes, the day for retrospective tax collection shall be the day of registering the on-spot export-import goods declarations.

If on-spot importing enterprises fail to declare and pay VAT and import tax for goods sold or used for other purposes, they shall, apart from paying fully the tax amounts prescribed by the Export and Import Tax Law and VAT Law, depending on the nature and seriousness of their violations, be sanctioned for acts of tax fraudulence according to current regulations.

VI. ORGANIZATION OF IMPLEMENTATION

This Circular takes effect 15 days after its signing. Particularly for the VAT-related guidance in this Circular, it shall apply as from January 1st, 2002. Regarding the procedural dossiers for VAT handling for cases arising between January 1st, 2002 and the effective date of this Circular, enterprises shall not have to produce the on-spot export-import goods declarations (except for foreign-invested enterprises).

All documents providing guidance on export tax, import tax and VAT applicable to on-spot export and import goods, which are contrary to the provisions of this Circular, are hereby annulled.

The ministries, the ministerial-level agencies, the agencies attached to the Government, the People�s Committees of the provinces and centrally-run cities are requested to coordinate with one another in directing the strict implementation of the above guidance. Should any problems arise in the course of implementation, agencies and units are requested to report them to the Finance Ministry for settlement.

For the Finance Minister

Vice Minister
TRUONG CHI TRUNG